Proposal for Civil Projects and Coal Combustion Residual Program Management Work

At the request of the Tennessee Valley Authority's (TVA) Supply Chain, we examined the cost proposal submitted by a company for civil projects and coal combustion residual program management work at TVA's steam electric power plants. Our examination objective was to determine if the company's cost proposal was fairly stated for a planned <br> $50 million contract.In our opinion, the company's cost proposal was overstated. Specifically, we found the company's proposed costs for a Cumberland Fossil Plant (CUF) project and proposed unit rates for a Bull Run Fossil Plant (BRF) project included overstated equipment costs, labor costs, temporary living allowance costs, and material costs. In addition, the company included (1) unallowable contingency costs for the CUF project, (2) a fee rate for the CUF project that exceeded the maximum allowable fee rate in TVA's request for proposal (RFP), and (3) unsupported costs in the BRF project. We also found the company's proposed rate attachments for (1) noncraft labor, craft labor, and contractor-owned equipment contained errors, and (2) fee on cost reimbursable work exceeded the maximum allowable fee rate in TVA's RFP.We estimated TVA could avoid $1.97 million on the planned $50 million contract by (1) negotiating appropriate reductions to equipment, labor, temporary living allowance, and material costs; (2) eliminating contingency costs from the company's CUF project and future cost reimbursable projects; (3) limiting the company's fee rate on the CUF project to the RFP's maximum allowable rate; (4) eliminating unsupported costs from the BRF proposal; and (5) negotiating appropriate reductions to the unit rates in the BRF proposal. In addition, we suggest TVA require revisions to the company's contract rate attachments.(Summary Only)